Core Viewpoint - CICC maintains an "outperform" rating for Tong Ren Tang (600085) and China National Pharmaceutical (03613), with a target price of HKD 10.50, indicating a 10.3% upside potential based on the company's proactive expansion of online and offline sales channels and continuous enhancement of its sales network layout [1] Group 1: Financial Performance - In the first half of 2025, the company reported revenue of HKD 762 million, a year-on-year increase of 14.6%, and a net profit attributable to shareholders of HKD 235 million, corresponding to an earnings per share of HKD 0.28, which is a 6.9% increase year-on-year, aligning with CICC's expectations [1] - The gross profit margin for the first half of 2025 was 60.8%, a decrease of 7.2 percentage points year-on-year, while the sales expense ratio was 13.5%, down 5.9 percentage points, primarily due to reduced retail terminal costs and marketing activities [3] Group 2: Market Expansion and Strategy - The Hong Kong market showed a strong recovery with a revenue of HKD 430 million in the first half of 2025, reflecting a year-on-year growth of 30.3%, driven by an increase in product sales from new store openings and renovations [2] - The company is actively expanding both online and offline sales channels and has signed a strategic cooperation agreement with China Duty Free Group to explore international market development [2] - The company is also updating product packaging, such as for its Rhodiola Rosea capsules, to enhance market appeal [2] Group 3: Operational Efficiency - The accounts payable turnover days decreased by 37 days to 35 days year-on-year in the first half of 2025, indicating improved operational efficiency [4] - The management expense ratio was 11.6%, reflecting a slight increase of 0.4 percentage points year-on-year [3]